How Much Can The CRA Garnish?

The Canada Revenue Agency can garnish your wages if you owe tax debt. But how much can CRA garnish? The CRA can garnish up to 50% of your earnings. Other income, such as income generated from contract work, can be garnished up to 100%! There is however more too it than that.

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How Much of Your Income Can the CRA Garnish?

A Canada Revenue Agency (CRA) garnishment can be very financially damaging. Most people would not be able to survive for very long if a large portion of their income was directed to the CRA. It becomes tough to buy groceries, make rent or mortgage payments, pay bills, or meet other financial obligations when you don’t have your full income.

But how much can CRA garnish? The amount the CRA can take depends on how you earn your income.

CRA Garnishment Amounts

Obviously, people are concerned with how much can CRA garnish, since it affects a person’s ability to make ends meet. If you earn an income and have taxes deducted at the source, such as if you earn a salary or an hourly wage, the CRA is able to garnish up to 50% of your income. This means that you will have to live off of half of your income. This is obviously incredibly tough to do.

However, if you earn subcontractor income or income as an independent contractor, the CRA can garnish 100% of your income. This means that you could conceivably have to live without earning any income. It doesn’t need to be stated how difficult this could be.

If you are self-employed or earn freelance income, the CRA can require your clients to send the 100% of money you have invoiced directly to the agency. Not only would this mean that you will not have any income, but it could also tarnish your reputation in your industry.

The Affect of a CRA Garnishment

Living on a significantly reduced income (or no income at all) can make it very difficult to live your daily life. However, there are other ways that a garnishment can negatively affect you. For instance, if you work in a role where you are expected to manage finances or be responsible for keeping track of specific financial details, your employer may think differently of you if they learn you have a significant tax problem.

The same is true if you are self-employed. If your clients learn about your tax situation, this could cause them to think twice about working with you in the future. In this instance, the garnishment not only affects your current financial situation, but it also makes it more difficult to earn income in the future.

Dealing with a CRA Garnishment

The CRA can garnish your wages without a court order and – in some cases – without notice. This is a power that other creditors do not have. Due to the significant damage that a CRA garnishment can cause in your life, it’s important to resolve the situation as soon as possible.

The professionals at Farber Tax Solutions have a proven history of successfully having garnishments lifted. We can also work with the CRA to negotiate a payment plan that works for you. While CRA negotiators are notoriously difficult to deal with, our team of ex-CRA, legal, and accounting professionals have the experience and knowledge to get the job done. Contact us today to find out how we can resolve your tax issue. You shouldn’t have to sit around and worry about how much can CRA garnish or whether you will be able to pay your bills on a reduced salary. Get your tax problem solved by speaking with Farber.

Farber Tax Solutions can help you successfully deal with CRA problems. We utilize the experience of our tax experts to:

1| Offer a comprehensive solution that is focused on achieving the most favourable possible outcome for your tax issue;

2| Communicate with the CRA on your behalf and navigate the entire CRA dispute process; and

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Farber Tax Solutions is a tax dispute resolution firm serving clients across Canada. Our team of ex-CRA professionals at Farber Tax Solutions provide effective tax solutions and the tax lawyers from our affiliate: Farber Tax Law, ensure that you get high-quality litigation services and legal advice. This ensures that you get holistic and robust tax solutions. We have built our reputation on outstanding client service and are committed to helping you succeed in your tax matter.

*Farber Tax Law is an independent law firm affiliated with Farber Tax Solutions in Ontario, Canada **Past results are not necessarily indicative of future results and the amount recovered will vary according to the facts in individual cases.